Welcome to the 222nd edition of Trade War.
The muzzling of an outspoken former editor shows party’s growing concern over economy. Beijing has a history of censoring unsanctioned comments on the Chinese market. And why the Ministry of State Security sees development and security as “two wings of one body.”
Following a politburo meeting, Beijing rolls out 20-step action plan to boost household spending. China’s stubbornly-low consumption the flip side of its competitive manufacturing sector and the world’s best infrastructure, argues economist. And new home sales drop by 20% in July, despite $42 billion aid package.
Xi Jinping’s policy preferences aim for a “fortress economy.” And youth angry about plans to raise retirement age—same as they were over a decade ago, when China unsuccessfully pushed same policy.
Notable/In depth ~
Local debt swamps China’s hinterland cities including Liuzhou, Guangxi
—plus a photo essay from my April visit to that remote southwestern city
A PRC annexation of Taiwan that disrupted the chips industry could cause economic losses on par with WWII, says new report
China is “producing well beyond domestic demand” in lithium batteries, electric vehicles, and solar panels, warns U.S. Ambassador to China Nicholas Burns
Muzzling of Hu Xijin shows economic duress
The muzzling of an outspoken former state press editor shows the Chinese Communist Party’s diminishing tolerance for unsanctioned voices and growing concern over China’s lagging economy.
Hu Xijin, the nationalistic former editor-in-chief of tabloid Global Times, has vanished from social media following online comments he made on July 22 suggesting that Beijing was shifting to a more supportive stance towards private enterprises.
China is hoping to “achieve true equality between the private and state-owned economy,” Hu wrote on his WeChat account, citing as evidence the omission of the phrase “state sector is the mainstay of the Chinese economy,” from the resolution released following the recent Third Plenum.
Hu’s WeChat as well as his nearly 25-million-follower Weibo account have now been suspended, reports Bloomberg News, citing a person familiar with the matter. How long the ban will last is unclear.
“Hu’s comments in the article, which has since been removed from WeChat, triggered widespread criticism on Chinese social media outlets, as some conservative commentators accused him of misinterpreting the resolution, which vowed to ‘consolidate and develop the state-owned economy,’” writes VOA’s William Yang.
China’s official viewpoint on the state and private sectors “hasn’t changed and won’t change in the future,” the official party mouthpiece People’s Daily said in a front-page commentary on July 30, without mentioning Hu’s now-censored article.
“As the Chinese economy gets into a more precarious situation, the leadership in China becomes increasingly aware that it is a source of instability, so they decide to double down on control over economic and business information,” Dexter Roberts, a nonresident senior fellow at the Atlantic Council's Global China Hub, told VOA by phone.
“His comments have crossed the red line set up by the Communist Party, and the severity of the punishment, which is an outright ban from posting on social media, sends a warning to the rest of China that authorities have zero tolerance for opinions that deviate from the official line,” says National Cheng-Kung University’s Hung Chin-fu.
“China’s top leadership will allow some discussions on the development of its private sector, but they don’t want those voices to overshadow the official narrative,” adds Hung.
Who’s, who, of censored economic actors
China’s efforts to control economic and financial information started much earlier than this latest episode.
Who’s been muzzled in recent years? Of particular note is Hong Kong-based analyst Hao Hong, who not only saw his social media Weibo and Wechat accounts censored, but was pushed out of his job as head of research at state-owned Bank of Communications International, in May 2022.
His sins: writing about the U.S. delisting of Chinese companies, capital flight, and the economic costs of China’s pandemic lockdowns, the latter a serious no-no when Covid Zero was still fully in force. Others who also have faced the wrath of China’s censors include two prominent market watchers—Peng Fu, chief economist at China’s Northeast Securities and Yuefeng Wu, a portfolio manager at a private-equity firm.
As China’s Politburo described it at their recent meeting on July 30 in Beijing, a national priority now is to “strengthen confidence in development, and sing the bright future of China's economy,” reported Xinhua News Agency (Chinese).
Development & security: “two wings of one body”
The campaign to clean up commentary on the economy really took off late last year, when China’s Ministry of State Security warned on its official WeChat account (Chinese) that Chinese must not be fooled by “false narratives” or those who “denigrate China’s economy,” and said it would “work with relevant departments to continuously and effectively prevent and resolve security risks in the economic field.”
“Various ‘clichés’ that intend to discredit the Chinese economy continue to appear. Their essence is to attempt to construct a ‘discourse trap’ and ‘cognitive trap’ of ‘China's decline’ with various false narratives, in order to continue to attack and deny the socialist system and path with Chinese characteristics, and attempt to carry out strategic containment and suppression of China,” the state security ministry wrote on WeChat.
“Development and security are the two wings of one body and the two wheels of one drive,” the MSS proclaimed.
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